Benefits of Making Business in Kenya | Buy & Sell Business

1. BENEFITS OF MAKING BUSINESS IN KENYA WWW.MERGERSCORP.COM

2. At MergersCorp M&A International we help our clients confidentially buy and sell privately held businesses, aligning the interests of all parties for mutual success and satisfaction. It is our goal to make the process of either buying a new business or selling your current business as smooth and efficient as possible. We know how important confidentiality is to our sellers and we treat it with the utmost importance. WWW.MERGERSCORP.COM

3. BENEFITS OF MAKING BUSINESS IN KENYA WWW.MERGERSCORP.COM

4. Country Overview Kenya is a country in East Africa with coastline on the Indian Ocean. It encompasses savannah, lakelands, the dramatic Great Rift Valley and mountain highlands. It's also home to wildlife like lions, elephants and rhinos. From Nairobi, the capital, safaris visit the Maasai Mara Reserve, known for its annual wildebeest migrations, and Amboseli National Park, offering views of Tanzania's 5,895m Mt. Kilimanjaro. With an area of 580,000 km², the country is somewhat larger than Metropolitan France or slightly more than twice the size of the U.S. state Nevada. Kenya has a population of 46 million people. Spoken languages are Swahili and English (both official), and numerous indigenous languages mainly Kikuyu and Luhya.

5. Executive Summary Largest and most populous city and the national capital of Kenya is Nairobi. Second largest city and the country's chief port is Mombasa. The Kenyan economy, East Africa's largest, has experienced considerable growth in the past few years, driven by several key factors. The country enjoys some particular advantages: a reasonably well-educated labour force, a vital port that serves as an entry point for goods destined for countries in the East African and Central Africa interior, abundant wildlife and kilometers of attractive coastline and above all, a government that is committed to implementing business reforms. The government type of Kenya is Presidential Republic

6. Introduction – Doing business in Kenya The country achieved a ranking of 61st out of 190 countries in the World Bank's 2018 Ease of Doing Business Survey. However, Kenya presents a dynamic business opportunity, with a rapidly expanding IT and telecoms sector. Kenya has a market-based economy and is generally considered the economic, commercial, and logistics hub of East Africa. With the strongest industrial base in East Africa, Kenya has been successful in attracting private equity capital. An additional attraction for companies is the strength of Kenya's human resources. Its urban areas, particularly Nairobi, are noted for their large number of well-educated English-speaking, and multi-lingual professionals.

7. Conducting business in Kenya The main business entities in Kenya are: •Registered Companies (private and public) •Branch office of a foreign registered company. •Partnership. •Limited Liability Partnership. •Sole proprietorships •Societies. The registration of businesses in Kenya has been made easier and faster. One can now do a name search and even register their business fully online on eCitizen. Since 15th October 2017, no manual registration of businesses is done by the registrar of companies.

8. Taxation in Kenya Kenya has a broad taxation system covering income taxes, value-added tax (VAT) and Customs and excise duty. These are governed by independent legislations that make provisions for the charge, assessment and collection of the respective taxes. The Kenya Revenue Authority (KRA) has different sections that deal with the above taxes and have authority to undertake reviews on companies to confirm they are paying the right tax. A Kenyan resident is taxable on his/her worldwide employment income; a nonresident is taxable only on Kenyan-source employment income. Only Kenyan citizens may offset tax on foreign employment income against the tax charged in Kenya on such income. .

9. Trade Kenya is the 101st largest export economy in the world and the 89th most complex economy according to the Economic Complexity Index (ECI). In 2017, Kenya exported $6.17B and imported $17.1B, resulting in a negative trade balance of $11B. In 2017 the GDP of Kenya was $79.3B and its GDP per capita was $3.29k. The top exports of Kenya are Tea ($1.38B), Cut Flowers ($687M), Refined Petroleum ($294M), Coffee ($265M) and Legumes ($134M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($2.43B), Palm Oil ($542M), Cars ($498M), Packaged Medicaments ($431M) and Raw Sugar ($409M).

10. Banking in Kenya by ownership. Some banks belong to local individuals/companies while others belong to foreign individuals or organizations. Another general classification of banks is by nature, that is, microfinance banks and commercial banks. The Central Bank of Kenya which governs banks further classifies commercial banks based on their assets. Tier 1 banks are large banks that have hundreds of billions in assets and are not likely to collapse financially. They are the top banks in Kenya. Tier 2 banks are medium-sized banks while tier 3 consists of small banks. The Central Bank of Kenya (CBK) is the primary regulator of the banking industry. The primary classification of banks in Kenya is

11. Our M&A Process NEGOTIATION & CLOSE POST MERGER INTEGRATION (PMI) INTEGRATION (PMI) POST MERGER TARGET APPRAISAL APPROACH DUE DILIGENCE Key Areas  Target & market analysis;  Initial assessment of synergies & value drivers;  Indicative valuation;  Go or No-Go decision;  Preparation of transaction documents (NDA – Non- disclosure Agreement/LOI- Letter of Intent);  Select Transaction team;  Appoint advisors;  Consider funding ability.  Initial approach letter;  Signing of NDA;  Prepare & share initial information requests;  Formulation of LOI (Letter of Intent) & possible negotiations;  Initial meeting and Q&A;  Circulate information on the Target to the Transaction team.  Set scope of due diligence;  Set up VDR (virtual data room);  Coordinating of due diligence, further meetings and Q&A sessions;  Consider points relevant to the Post-Merger (PMI) phase;  Revisit indicative valuation & prepare detailed valuation based on due diligence findings;  SPA negotiations with the seller;  Development of final structure (share/asset deal) and final valuation;  Approvals;  Signing of SPA & Close.  Consider the extent of integration;  Development of 100 Day PMI Plan;  Consider short & long term objectives;  Estimate requirements to capture synergies;  Determine resource needs & optimal allocation. Parties Involved  CFO;  Head of M&A;  Accountants;  Corporate finance advisors;  Consultants.  Senior management;  CEO, CFO, CTO;  Strategy director;  Head of M&A;  Head of Business Development;  Consultants.  Company general counsel;  Lawyers;  Senior management.  Company general counsel;  Lawyers;  Senior management/HR. 11 © Midaxo 2018 www.midaxo.com

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13. MergersCorp.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Member firms of the MergersCorp network of independent firms are affiliated with MergersCorp International. MergersCorp International provides no client services. No member firm has any authority to obligate or bind MergersCorp International or any other member firm vis-à-vis third parties, nor does MergersCorp International have any such authority to obligate or bind any member firm. Copyright © 2020 MergersCorp International. All rights reserved. 13 © Midaxo 2018 www.midaxo.com